Institutional Mechanism for Forming Departmental View on Contentious Legal Issues
Circular No. Office memorandum [F.NO. 279/M-61/2012-ITJ], dated 28-8-2012 was issued by the Central Board of Direct Taxes on 28 August 2012. Its subject is Institutional Mechanism for Forming Departmental View on Contentious Legal Issues.
Sets up an internal machinery for arriving at a settled Departmental View on contentious legal issues. A Central Technical Committee is constituted in the Board, comprising the Joint Secretary (TPL)-II, the Commissioner (ITA) and the Director of Income-tax (Research) or Commissioner (OSD) of the Directorate of Legal and Research as Member Secretary, with power to co-opt others, and a Secretariat under the Directorate of Legal and Research assists it. Each cadre controlling Chief Commissioner must constitute a Regional Technical Committee of an administrative Commissioner, a Commissioner (Departmental Representative), the Commissioner (Audit) and a Commissioner (Judicial) or Commissioner (Appeals), with the Additional Commissioner in charge of judicial work as its Secretary. Issues are referred to the Regional Committee by the administrative Commissioner, the Departmental Representative or the Commissioner (Appeals), or by any officer through his Commissioner, or taken up on its own motion; the Regional Committee meets at least monthly and is to leave no reference pending beyond two months. It refers a matter upward where there are conflicting interpretations by the Appellate Tribunal, a High Court or the Authority for Advance Rulings, where an interpretation defeats the legislative intent, where substantial revenue or wide ramifications are involved, or where the issue is generating large scale litigation.
A large part of direct tax litigation was found to involve interpretation of legal provisions, and the absence of clarity among officers on a contentious issue was leading to inconsistent approaches and further litigation.
Institutional Mechanism for Forming Departmental View on Contentious Legal Issues
office memorandum [F.No. 279/M-61/2012-ITJ], dated 28-8-2012
It has been observed that a large part of litigation in the Direct Taxes matters involves interpretation of legal provisions. Lack of desired clarity on a contentious legal issue, amongst the officers of the department, sometimes leads to inconsistent approach on the same issue giving rise to further litigation. With a view to provide clarity on contentious legal issues, promote consistency of approach on a given issue and reduce litigation, it has been decided to set up the following institutional mechanism to formulate 'Departmental View' on contentious legal issues:
Central Technical Committee
2. There shall be a Standing Committee in the Board known as "Central Technical Committee (CTC) on Departmental View" with the following members:
(i) JS (TPL)-II, CBDT
(ii) CIT(ITA), CBDT,
(iii) DIT(Research)/CIT(OSD), Directorate of L&R, Member Secretary
The CTC may co-opt JS(FTD), CIT(Inv.), C1T(IT&CT) or CIT(A&J) as may be required. The senior-most member shall act as Chairman of the CTC in its meetings. The CTC may also invite any officer of the Department conversant with the matter for relevant inputs and deliberations.
The Secretariat
3. There shall be a Secretariat to assist the CTC. The Secretariat shall be headed by the DIT(Research)/CIT(OSD) under the supervision and control of the DGIT(L&R). The Secretariat will conduct research and provide inputs necessary for the CTC to deliberate upon the issues and formulate the 'Departmental View' for consideration of the Board. The DIT(Research)/CIT(OSD), being the member secretary of the Committee, shall be the liaison officer between the Committee and the Secretariat.
Regional Technical Committee
4. In order that the contentious legal issues are first discussed at the local level and duly filtered, each CCIT(CCA) shall constitute a "Regional Technical Committee" (RTC) consisting of the following members :
(i) One administrative CIT
(ii) One CIT(DR)
(iii) CIT(Audit)
(iv) CIT(Judicial)/one CIT(A)
Addl. CIT(J)/Addl. CIT(Technical) in-charge of judicial work in CCIT (CCA)'s office shall act as Secretary to the RTC. The RTC may invite any other officer, conversant with the issues under deliberation, to its meetings.
Identification of Contentious Legal Issues
5. Any issue considered as contentious and having wide implications shall be referred to the RTC as and when the issue is identified. The possible sources to identify such issues may include the following:
(a) The administrative CIT
(b) The CIT(DR)
(c) The CIT(A)
In addition to the above, any officer may refer an issue considered contentious to the Secretary of the RTC through the CIT concerned. The RTC may also pick up any issue for consideration suo motu.
Procedure at Regional Technical Committee
6. The Secretary of Regional Technical Committee shall place the references for consideration of the RTC. The Committee shall meet at least once a month. However it should be ensured that no reference is pending for more than two months. The CCIT(CCA)/CCIT looking after judicial matters of the station, shall supervise the functioning of the RTC.
7. The RTC shall examine the issue with reference to the relevant provisions of the Income-tax Act and the judicial decisions available on the issue. The Regional Technical Committee shall refer the issue to the Central Technical Committee if it is of the view that-
(i) there are conflicting interpretations by ITAT/High Court/AAR in respect of a statutory provision, or
(ii) the interpretation of a statutory provision by ITAT/High Court/AAR defeats the legislative intent, or
(iii) the dispute involves substantial revenue or has wide ramifications, or
(iv) the issue involved is resulting in large scale litigation,
(v) there is any other reason for referring the issue to the CTC.
The proposals to CTC should include:
(a) A brief referral note specifying the controversy.
(b) Copies of relevant orders i.e., order of Assessing Officer, CIT(A), ITAT, High Court etc. as may be available.
Work Process of the Central Technical Committee
8. The Secretariat may receive references for the consideration of the Central Technical Committee from CBDT, RTCs and DsIT(L&R). The CTC may also pick up any issue for consideration suo motu.
9. The proposal shall be first processed by the Secretariat as may be directed by the Committee to enable it to formulate the Departmental View, taking into account various aspects and divergent opinions on the issue. The Committee shall take up references to formulate 'Departmental View' considering their relative importance. However the reference received from the Board shall be taken up for consideration on priority.
10. The CTC shall regulate its own functioning. However the CTC shall meet at least once in a month. Once a question is taken up for consideration, the Committee shall examine the same and form a tentative view taking into account divergent opinions on the issue. The tentative view may be circulated to the Regional Technical Committees of all the CCsIT(CCA) seeking their response. The RTCs may, before giving feedback to CTC on tentative view, discuss the issue on its own and/or seek inputs from other field officers. The CTC may also call for opinion from professional bodies and retired judges etc, as it may deem fit. The CTC may also solicit opinion of Ministry of Law through Member (A&J) in suitable cases.
11. The CTC shall also get the views of the respective divisions of the Board on the issue involved. If views of the concerned divisions are different/conflicting with the tentative view of the CTC, the matter shall be resolved by discussion of Member (A&J) with the Member(s) concerned. Thereafter final draft will be prepared and sent for examination by the Circular Group of the Board. The draft 'Departmental View' will then be put up through Member (A&J) to the full Board for consideration.
Dissemination of 'Departmental View'
12. If approved by the Board, the 'Departmental View' will be issued as Circular u/s 119 of the IT Act by ITJ division of the CBDT for compliance by all concerned.
13. Where any High Court decides an issue contrary to the 'Departmental View', the 'Departmental View' thereon shall not be operative in the area falling in the jurisdiction of the relevant High Court. However the CCIT concerned should immediately bring the judgment to the notice of the CTC. The CTC shall examine the said judgment on priority to decide as to whether filing of SLP to Supreme Court will be adequate response for the time being or some legislative amendment is called for.
14. The above mentioned institutional mechanism comes into force with immediate effect.
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Where the Department presses a uniform position across assessees and the origin of that position, rather than the statute, is in question.
← Order [F.NO. 500/15/2011-FT&TR-I], dated 28-8-2012 · Press Release NO.402/92/2006-MC (3 OF 2012), dated 21-8-2012 →
Source: the Income Tax Department’s own published text — its page for this instrument.
